The Geoeconomics of Cyberspace

T

he past year’s worth of world business and financial commentary has been rife with coverage of Fortune 500 companies getting hacked by freelancers worldwide. Freelancers here refers to individuals armed with nothing more than a computer and an internet connection, regardless of whether the hacking is being done from a State-sponsored university campus or their own home. Most observers see cyber attacks as a matter of internet security, of general maintenance, with little importance for corporate strategy in major G7 economies. This could not be further from the truth. The recent spate of cyberattacks to hit global banks, multinationals, and government services, is endangering competitiveness and competitive advantage in strategic industries from London, UK, to Dallas, Texas. It is a sophisticated form of economic warfare that is here to stay, with drastic implications for the global balance of economic power.

For the readers not acquainted with the field of geoeconomics, it is best to explore the World Economic Forum’s Global Agenda Council on Geoeconomics, 2014 edition, in order to get a run-down of this year’s topmost economic strategic risks to global growth. Geoeconomics is the study of the international trade and economic competitive implications of geopolitical competition. In an age when international conflict inspired by trade considerations is unfeasible, prohibitively expensive, and illegal, more sophisticated forms of constraints to State power are emerging, stiffening world economic competition. Though economic statecraft has always had a role to play in the standard toolkit of foreign affairs and international trade policy, the drastic drop in State-to-State conflict since the 1970s has confined previously belligerent trade-competition to the realm of geoeconomics and 21st century economic statecraft.

What this means is that the defence of national interest, in its economic variant, has evolved to the more distilled and opaque realm of economic strategy, coloured by domestically inspired macro-political objectives, such as calls for advances in democratization and trade-openness. The pursuit of national economic interest in international politics today is achieved through international corporate strategy, the protection of home-spun intellectual property, and constant government monitoring of citizens’ relative competitiveness on the world stage. The massive, repeated and state-sponsored, theft of intellectual property from the Fortune 500, orchestrated by allegedly Russian, East Asian, and Iranian elements among others in recent months, constitutes a direct assault on all three.

It is a business reality today that major global banking groups will be relentlessly hacked for product and consumer profile information. International oil companies have withstood thousands of cyber attacks meant to destabilize strategically important energy infrastructure in the United States, in Canada, and all over the European Union. Big Data giants such as Google, Facebook, Amazon, and others have been victims of several waves of hacking, and government-led pressure to relax intellectual property standards while trading abroad in exchange for access to China’s gargantuan potential user base (in the hundreds of millions).These micro-thefts are reportedly helping emerging economies like China, and state-sponsored tech companies and agencies, to develop comprehensive profiles of the North American consumer, replete with everything from shopping habits to typical interactions or relationships with Government, and social insurance information.

At the same time, companies like GDF Suez, ENGIE, Shell, and Electricite de France (EDF), are integrating the internet of energy (IoE) theme and its rise as the standard mode for household energy consumption in the G7. Smart-grids now define the most-favoured format for mass consumption. Financial services companies known to be global leaders in their respective sub-specialties are updating themselves for Big Data-driven consumption. Corporate management software, previously guarded and proprietary, are now moving into a shared common cloud infrastructure.The internet of things (IoT) theme, devices whose very physical makeup is connected to the broader internet and fuelled at an atomic level, are currently redefining mass-consumption and government services, from home appliances to health care. These tens of trillions of items forecasted to be manufactured by 2030 are multiplying the vulnerability level of today’s economic and social livelihood to foreign cyber attacks by several orders of magnitude, multiplying threat opportunities by hundreds of thousands to a million.

With Canada’s national interest clearly on the line in this e-melee, what can policymakers do in order to ensure the country’s sustained, unhacked, competitive advantage in the global information economy? First, they should ramp up collaboration between the country’s major commercial groups and the security services in the realm of preventive monitoring and early alerts. There is a gap between what security services and corporate-mandated cybersecurity professionals know about foreign State-enabled hackers. This gap needs to turn into a net positive sum of pooled insights. Our domestic economic governance is unparalleled in how collegial it can often be, let this be an opportunity. Second, foreign policy decision-makers need to include the protection of Canadian intellectual property as an integral part of our trade agreement diplomacy. Third, Canada’s competitive advantage in global information economy trade needs to be protected, which calls for greater federal and provincial sync with local digital and strategic ecosystems all over Canada. All things considered, public commentary on the country’s competitiveness should remain vigilant as to cyber attacks and their impact on Canada’s economic prospects.

About Yves Guillaume

Yves is a Contributor to the NATO Association of Canada. He is a regular political commentator on CTV National News’s “True North Politics” as well as its “Political Express” panel as an active member of the Liberal Party of Canada. He frequently appears on TVO’s “The Agenda with Steve Paikin”, City TV, and other networks. Yves Guillaume writes for the Huffington Post among other print media, contributes to various international radio outlets, speaking on foreign affairs and the international business on networks such as Radio Moscow, The Voice of Russia.